Gatto Given 8 Years for Gold Fraud

Jerome C. Gatto, who federal prosecutors believe tried to bilk J. David (Jerry) Dominelli out of $125,000 in early 1984, was sentenced Monday in Salt Lake City to eight years in federal prison for masterminding a fraudulent scheme to sell interests in a Northern California gold mine.

Gatto pleaded guilty on June 3 to securities fraud and to inducing travel across state lines with the intention to defraud. He was sentenced Monday by U.S. District Judge David Winder to eight years on the latter charge and given five years’ probation on the former.

A condition of his probation, which will begin after completion of his prison term, was that he cannot participate in “any business activity involving raising of funds or giving of loans,” according to Assistant U.S. Atty. Richard Lambert in Salt Lake City. Gatto likely will serve 52 to 64 months in prison before being paroled, Lambert said.

Gatto pleaded guilty to defrauding Carol Diane Cook, a real estate developer from Marina del Rey, of $100,000. Unbeknownst to Cook, the gold mine--near Yosemite National Park--she invested in already had been sold to another of Gatto’s defrauded investors.

Gatto, who will begin his sentence in the next 15 days, is expected to be sent to the federal prison at Pleasanton, about 40 miles east of San Francisco.

That, ironically, is also the prison where Dominelli will serve his 20-year sentence for the collapse of his fraud-ridden J. David & Co. La Jolla investment firm.

Dominelli, desperate for funds to pay off his angry investors in early 1984, paid Gatto and an associate, Joseph C. Bonanno Jr., $125,000, supposedly to secure a $125 million loan. Dominelli was going to use the money to pay back investors, but federal authorities claim that Gatto and Bonanno had no intention of ever making the loan.

The presence of both Dominelli and Gatto in the same federal facility doesn’t seem to bother federal prosecutors.

“I doubt they will be the only two swindlers in Pleasanton,” surmised Assistant U.S. Atty. Robert D. Rose, who led the federal probe of Dominelli. A federal grand jury is still investigating Dominelli’s bankrupt firm and the role of a few key executives.

Gatto served as his own attorney in the Salt Lake City case because Judge Winder ruled in December that there was a potential conflict of interest with his prior attorney, D. Gilbert Athay.